Multiple bidding likely curbed competition in coal auctions: CAG

Multiple bids by corporate groups through joint ventures (JV) or group subsidiaries may have restricted competition in case of auctions last year of 11 coal blocks, among the allotments cancelled earlier by the Supreme Court, India's official auditor said on Tuesday.

"Audit could not draw an assurance that the potential level of competition was achieved during bidding of 11 coal mines auctioned in the first two tranches," said the Comptroller and Auditor General's (CAG) latest report on e-auction of coal mines that was tabled in parliament.

It said that in 11 out of 29 coal mines e-auctioned in first and second round, a number of qualified bidders in the e-auction stage were from the "same company/parent subsidiary company coalition/joint venture (JV)".

Where the standard tender document allowed the participation of JVs while simultaneously limiting the number of qualified bidders (QBs) which could participate in the action, CAG could not draw an assurance that the potential level of competition was achieved during the bidding of these 11 coal mines in the first two tranches, it said.

In the third tranche, the Coal Ministry amended the clause of JV participation with the objective of increasing participation, it added.

The coal ministry put up firewalls against the probability of price-rigging or cartelisation from the third round.

In the second round, for example, natural resources major Vedanta had placed 25 bids for 14 out of 23 producing blocks being auctioned. The Aditya Birla Group put in 15 bids for eight blocks, while Jindal Steel and Power put in 13 bids for six blocks.

The CAG report said the limit on the number of qualifying bidders, while allowing participation of JVs and subsidiaries, did not elicit confidence that the potential level of competition was achieved in the second stage of bidding.

The government has auctioned 34 coal blocks, which are estimated to generate a revenue of Rs 2.85 lakh crore over 30 years for the producing states.

--IANS

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